Floyd Industries stock has a beta of 1.25. The company just paid a dividend of $.40, and the dividends are expected to grow at 5 percent per year. The expected return on the market is 12 percent, and Treasury bills are yielding4.7 percent. The most recent stock price for Floyd is $64.
a. Calculate the cost of equity using the DDM method. (Round your answer to 2 decimal places. (e.g., 32.16))
DDM method %
b. Calculate the cost of equity using the SML method. (Round your answer to 2 decimal places. (e.g., 32.16))
SML method %